Dollar Backs Off Following Gains, Remains Strong

The US dollar is backing today after yesterday’s gains. Yet the currency is still strong, trading near a new multi-year high against the euro, following some positive reports from the United States.
The major indicator that drove the dollar up was gross domestic product. GDP rose 5 percent in the third quarter of this year, beating market expectations. The University of Michigan consumer sentiment index was also positive, sitting at the highest level since 2007. Not every report was good, and the housing market demonstrated particularly disappointing results. Yet the market preferred to pay more attention to the positive part of macroeconomic data.
The positive news feeds the idea that the Federal Reserve is going to raise interest rate early rather than later. This is yet another reason for traders prefer the dollar over other currencies.
EUR/USD traded at 1.2174 as of 2:27 GMT today, close the lowest level since August 2012. GBP/USD was at about 1.5514 following yesterday’s drop from 1.5589 to 1.5519. USD/JPY fell from 120.68 to 120.34.

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